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To: Ian@SI who wrote (6415)	9/10/1998 2:20:00 AM
From: pat mudge	Respond to of 18016

ACC purchase by Ericsson, Part I --- Background: Interview with head of Ericsson's InfoCom unit: ericsson.se Press release: ericsson.se ACC: acc.com ACC and Ericsson: acc.com Article in Watermark, ACC's in-house news magazine: acc.com Message from Bert Whyte, ACC CEO: acc.com http://www.acc.com/search?NS-search-page=document&NS-rel-doc-name=/internet/acc_central/watermark/december_1997/bert.html&NS-query=Ericsson&NS-search-type=NS-boolean-query&NS-collection=ACC%20Internet%20(HTML)&NS-docs-found=8&NS-doc-number=5So how does ACC expect to realize its mission? The answer is twofold: the right product solution and the right channel partners. By understanding what the real growth market is and what solutions are required, and by taking qualified risks and making smart decisions, ACC can be a leader. Eighteen months ago, we took a risk with Tigris. We bet that the market would migrate from fixed port access servers to higher-end remote access concentrators capable of integrating routing, modem pooling, and remote access server functionality into one integrated platform. We also bet that as the decade progressed we would see strong growth in outsourcing and Virtual Private Networking (VPN), making carrier-class applications the fastest growing market segment. Our gamble has paid off. We now offer the only true carrier-class concentrator on the market today. Tigris features innovative software that allows service providers to profitably offer VPN solutions and premium IP services. By allowing service providers to treat all of their remote access concentrator ports as one virtual pool, ACC's Access Partitioning Service Manager (APSM) gives service providers the power to outsource profitable corporate remote access and wholesale Internet access. To complement our carrier-class remote access solution, ACC has world-class channel partners. The result has been strategic partnerships with three of the top companies in the industry ¥ Ericsson, Newbridge, and Siemens. Each of these partnerships gives ACC access to the largest carrier service providers throughout the world, and each partner chose ACC because of our foresight in developing a carrier-class platform and our unique strength in quickly responding to market requirements with quality features and products. Background to Ericsson's datanetworking strategies: www3.ericsson.se ericsson.se

To: Ian@SI who wrote (6415)	9/10/1998 2:22:00 AM
From: pat mudge	Read Replies (2) \| Respond to of 18016

ACC purchase, Part II --- Conference Call Ericsson-Newbridge Networks Conference Call, September 9, 1998. Participants: Ken Wiggelsworth and Terry Matthews from NN, and Anders Igel and Michael Thurk from Ericsson. Anders Igel: The purchase of ACC by Ericsson is in keeping with its stated goal to acquire small to medium sized companies to augment its datacom strategies. Goal is to be major player in carrier class communications. The ACC Tigres products will be used in the merged network. Ericsson's networking unit is headquartered in Boston and needs carrier class remote access products for large ISPs, CLECs, and ILECs. This market is estimated to be US $1.7 billion with 40% annual growth. ACC's Tigres will be the cornerstone. Terry Matthews: For Newbridge this represents a strengthening of our relationship. Will include joint R&D, reseller agreements, and joint marketing. The ACC line will continue to be sold as MainStreetXpress 36100. Ericsson will work on CSI with us. IP-VPNs will be jointly developed. CSI will be implemented into Tigres. We are pleased with the deal. It allows us to maintain our relationship with ACC while strengthening our ties to Ericsson. Q&A: RBC Dominion: Q: What's the financial impact on NN? A: Can't give accounting gains right now. It will be public at close of quarter. NN owns 60% of ACC. Selling price US$285 million. Volpe Brown: Q: What's impact of international sales on Ericsson's growth? A: The Tigres product is out now. The 11-slot is in beta. A portion will accelerate in Carrier presence. Ericsson will grow US business. Over 50% outside US for ACC. This will accelerate. BT Alex Brown: Q: Steps to develop IP networking capability? What holes need to be filled? A: Strategy is targetting solutions --- develop through equity and acquisitions. Prudential Securities: Q: Does the Ericsson -NN relationship extend into other areas? A: There are a number of opportunities. Too early to comment. Chemistry is very good. We'll continue to working together on datanetworking and ATM. Q: Does Siemens preclude closer work with Ericsson? A: Moving to CSI. Chemistry is good. Openness is pleasing. It's not against Siemens or any other. NationsBanc: Q: What's revenue of ACC in '97? Products by geography? A: Results of ACC not released. Over US$50 million annually and growing in double digits. Potential to grow 100% annually exists. Geography: over 60% outside U.S. Q: Product integration with Ericsson's existing products? A: Will make Tigres part of total solution for data networks. Stand-alone and for IP access in fixed networks. Also in wireless. More IP put into both wired and wireless. May use in voice/data enterprise solution. Already planned. Warburg Dillon Read: Q: Gross margins? A: Over 50%. Well north of that for Tigres. Q: How do you compete with Ascend and Cisco? A: This is a hot area. We have leadership products and integrated solutions. A box from Cisco or Ascend won't compete. Q: Customers targeted? A: Higher ISPs, CLECs, carriers like BT. We can provide range of different types of networks : wired, mobility, and datanetworking. SG Cowen: Q: Any charges or dilution? What contribution? A: No release at this point. Q: How quickly will impact be felt? A: We know company well. Excellent relationships. Start-up is very short. Q: Any performance provisions on closing? A: No. Robertson Stephens: Q: Any changes in NN and ACC? A: No basic change. Credit Suisse 1st Boston: Q: There was small net income for ACC in '97. . . A: Tigres product is fairly recent. Will expand investments in ACC. Q: Why did NN change ownership? A: NN has quite a few affiliates. Selling ACC allows us to work closer. The sale benefits both companies. It includes CSI joint development. . . . Having a relationship with a company like Ericsson is excellent. Credit Suisse 1st Boston: Q: What is your view of progress in InfaCom. . . is this part of guidance? A: Datacom and network development is separate, but we hope this helps us to grow. Q: Revenue opportunities in joint companies? How do you break down US/Europe/Asia? A: The regional for datacoms business, if you take China out, is 55% in Europe, 35% in US, and 10% in Asia. Paine Webber: Q: Does this accelerate or delay when InfoCom will be profitable? A: This is neutral. Q: R&D capability as part of acquisition? A: Target is Carrier Class networking market. Some ISPs require edge in enterprise. [Suggested they'd still work in that space.] We're staying away from commodity LAN components. Scotia Capital Markets: Q: How will cSI partners work together? A: A lot of people are working together and you'll see more announcements and I think you'll be pleased. . . more beyond today's. Q: Revenue sharing? A: Many participants, working together on architecture and standards. Credit Suisse: Q: Do ACC revenues go through NN? A: Some they handle directly, some flow through NN. Q: What about product mix? A: The mix will shift dramatically. Tigres will be deliverable by end of calendar quarter. TD Securities: Q: Resources (people) required? A: Fair number in CSI, but some (2 or 3) will be designated. Ericsson has been involved in CSI and we'll have to take a look at it. Specs have been written. Volpe Brown Waylan: Q: Applications for wireless? A: Tigres is essential for Carrier networks. You will access Internet and Tigres will be there. Many software elements will be valuable. Scotia: Q: NN is selling all. . . Ericsson will own all? A: Yes. Globe and Mail Q: If it's a US $1.7 billion market, why are you selling? Were there IPO plans? A: No spinoff plans. This has been discussed for 6 months. Partnership is still in place. The [CSI] partnership is being imbedded into ERICY products. Ottawa Sun: Q: No preclusion with regards to Siemens? A: Siemens is already of aware of this. Relationship is healthy. CSI is healthy with many companies. Q: Further changes in affiliate strategy? A: There have been IPOs, sales, mergers, and an NN buy. We do what's right in a business manner. Anders: ACC is enthusiastic.

To: Ian@SI who wrote (6415)	9/10/1998 3:08:00 AM
From: pat mudge	Read Replies (2) \| Respond to of 18016

I could be way out in left field, but I get a strong sense that the sale of ACC is a political move. Newbridge gains a strong CSI partner and Ericsson gains a carrier-class access concentrator business. Together the two companies will push CSI architecture through standards bodies, and market total solutions through their sales channels. When asked how this relationship would affect the Siemens' partnership, Terry Matthews indicated there were more announcements to come now that summer was over. "You'll be pleased," he said. "There'll be more, beyond today's." I certainly don't see the addition of Ericsson as a threat to Siemens, but I do wonder what form the relationships will take over time. Any ideas? Later -- Pat

To: Ian@SI who wrote (6415)	9/10/1998 11:11:00 AM
From: Doug	Read Replies (1) \| Respond to of 18016

Ian: Markets usually move in anticipation of events. The equity market moved up because it anticipated A.G would lower Interest rates. That would help to stimulate the economy and simultaneously help to solve the currency devaluation problem in Asia , Latin America and Eastern Europe. The economic problems that existed prior to A.G's remarks have not changed todate. They remain exactly the same. If no concrete action is taken to address them , it is logical for the market to surrender the gain it made on hopes for a solution. No solution, no gain.!